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Auto Advice from the Beaverton Car Guy: What you should know about Certified Pre-Owned

| May 1, 2015 | 0 Comments

By Larry Ferguson

Despite strong new car sales, more shoppers are also considering certified used cars. AutoTrader.com, the largest web site for car ads, reports that five percent more visitors to the site checked out certified cars in April than at the start of this year.

When do certified used cars make financial sense?

With used-car values overall at near-record highs, you have to shop carefully. But if you can get a carefully inspected vehicle with a manufacturer-backed warranty for at least $5,000 less than a new car or monthly payments close to $200 lower, it is worth consideration, says AutoTrader.com editor Brian Moody.

For most brands, certified used cars involve cooperation between manufacturers and their dealers. The dealers select relatively low-mileage cars, often returning from three-year leases. Then they give those cars a detailed inspection as stipulated by the auto makers. Certified cars usually carry a new warranty backed by the manufacturer.

Certified cars work especially well with luxury brands, where a shopper may not be able to afford a new version. The AutoTrader April top 20 list of most-researched certified cars includes three BMW models, two Mercedes-Benz and one Audi along with Hondas, Toyotas, Fords and Chevrolets.

If you are considering a certified car option, Larry Ferguson suggests the following advice:

Do the math carefully.

Loan rates are almost always higher for used cars. If you can get a promotional zero percent rate on a new car, that may be your best deal. And most new models have better MPG ratings than their older counterparts, saving money at the gas pump.

Make sure you are getting a manufacturer’s certification program.

Used car lots along the highway put up signs touting certified used cars that mean little. A franchised new car dealer should be offering a program overseen and backed by the maker of its brand that requires specific inspection and fixing of defects. But double-check that a car you are considering is indeed in an auto company program.

Check the warranty.

Manufacturer certified programs typically add an additional warranty whether or not the original one has expired. The certified warranty usually lasts for one year from the date of purchase. Moody points out that, just as with new car warranties, any work that is covered can be done at the dealership with no outlay from you. With many extended warranties you might buy to go with a non-certified used car, you must pay up front for any repairs and then collect from the warranty insurer.

In the months ahead, prices may become more attractive on certified used cars. Black Book, which provides vehicle valuations for auto industry professionals, is reporting an easing of the used car shortage that has pushed prices up over the last two years. So the certified comparison with new cars could look stronger as you are shopping.

Thank You for reading!

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